Correlation Between The Hartford and Americafirst Large

Can any of the company-specific risk be diversified away by investing in both The Hartford and Americafirst Large at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining The Hartford and Americafirst Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Hartford Capital and Americafirst Large Cap, you can compare the effects of market volatilities on The Hartford and Americafirst Large and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in The Hartford with a short position of Americafirst Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Americafirst Large.

Diversification Opportunities for The Hartford and Americafirst Large

0.92

Correlation Coefficient

The Hartford  Americafirst Large

Almost no diversification

The 3 months correlation between The and Americafirst is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Capital and Americafirst Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Large Cap and The Hartford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Hartford Capital are associated (or correlated) with Americafirst Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Large Cap has no effect on the direction of The Hartford i.e., The Hartford and Americafirst Large go up and down completely randomly.

Pair Corralation between The Hartford and Americafirst Large

Assuming the 90 days horizon The Hartford Capital is expected to under-perform the Americafirst Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Hartford Capital is 1.31 times less risky than Americafirst Large. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Americafirst Large Cap is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,456  in Americafirst Large Cap on December 24, 2024 and sell it today you would lose (94.00) from holding Americafirst Large Cap or give up 6.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

The Hartford Capital  vs.  Americafirst Large Cap

Hartford Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hartford Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Americafirst Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Americafirst Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with The Hartford and Americafirst Large

The main advantage of trading using opposite The Hartford and Americafirst Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Americafirst Large can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Americafirst Large will offset losses from the drop in Americafirst Large's long position.

The idea behind The Hartford Capital and Americafirst Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.